Educational loans

City Union Bank Ltd

Bank Type : Goverment Bank
No. Of Branches : 436

About Bank

The bank, 'The Kumbakonam Bank Limited' as it was then called was incorporated as a limited company on 31st October, 1904. The first Memorandum of Association was signed by twenty devoted and prominent citizens of Kumbakonam including Sarvashri R. Santhanam Iyer, S.Krishna Iyer, V.Krishnaswami Iyengar and T.S.Raghavachariar. T.S.Raghavachariar was the First Agent of the Bank.  In 1908, he was succeeded by Shri R. Santhanam Iyer who became the Secretary of the bank under the amended Articles of Association which created the office of a Secretary to be in charge of the Bank's Management in the place of the Agent, which post he held till his death in 1926. He was succeeded by Shri. S. Mahalinga Iyer as Secretary who subsequently became the First full-time Managing Director of the bank in tune with the amendment of Articles in 1929.  He held the position of Secretary from 1926 to 1929 and that of Managing Director from 1929 to 1963.

The bank in the beginning preferred the role of a regional bank and slowly but steadily built for itself a place in the Delta District Thanjavur. The first Branch of the Bank was opened at Mannargudi on 24th January 1930.  Thereafter, branches were opened at Nagapattinam, Sannanallur, Ayyampet, Tirukattupalli, Tiruvarur, Manapparai, Mayuram and Porayar within a span of twenty five years.  The Bank was included in the Second Schedule of Reserve Bank of India Act, 1934, on 22nd March 1945.

The Bank celebrated its Golden Jubilee on 14th November, 1954 at Kumbakonam under the Presidentship of Shri.C.R.Srinivasan, Editor, 'Swadesmitran' & Director, Reserve Bank of India. 

In 1957, the bank took over the assets and liabilities of the Common Wealth Bank Limited and in the process annexed to it the five Branches of Common Wealth Bank Limited at Aduthurai, Kodavasal, Valangaiman, Jayankondacholopuram and Ariyalur.

In 1963,  Shri. R. A.Venkataramani Iyer took charge as the Chairman of the Bank which position he held up to 1969.

Loan Procedures

City Union Bank Education Loan:


The Educational Loan Scheme aims to provide financial support to deserving/meritorious students for pursuing higher education in India and abroad. The Scheme also aims to provide financial assistance to the needy poor to undertake basic education.

Eligible Courses of Study in India:

1. Graduation courses - B.Sc, B.A, B.Com etc

2. post graduation courses- Masters & Ph.D

3. Professional courses - Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Computer etc

4. Computer certificate courses of reputed institutes accredited to Dept. of electronics or Institutes affiliated to University

5. Courses like ICWA, CA, CFA etc

6. courses conducted by IIM, IIT, IISc, XLRI, NIFT etc

7. Regular degree/diploma courses like aeronautical, pilot training, shipping etc approved by Director general of Civil Aviation / shipping, if the course is pursed in India. In case the course is perused abroad, the institute should be recognized by

the competent local aviation/shipping authority

8. courses offered in India by reputed foreign universities

9. evening courses of approved institutes

10. Other courses leading to diploma / degree etc., conducted by colleges / universities approved by UGC / Govt. / AICTE / AIBMS / ICMR etc

Eligible Courses of Studies abroad:

1. Graduation : For job oriented professional / technical courses offered by reputed universities

2. Post-Graduation - MCA, MBA, MS, PhD etc.

3. Courses conducted by CIMA-London, CPA in USA etc

Student Eligibility:

1) Should be an Indian Resident.

2) Secured admission to Professional/Technical courses through Entrance Test/Selection Process and should produce proof.

3) Secured admission to Foreign University / Institutions and should produce proof.

4) No specific age restriction with regard to age of the student

to be eligible for educational loan

Purpose of the Loan:

1) For payment of College / School/ Hostel Fees.

2) For payment of Examination / Library / Laboratory Fees.

3) For purchase of books/equipments/instruments.

4) For payment of Caution Deposits (caution deposit not to exceed 10% of total tuition fees for the entire course)

5) For making Travel Expenses / Passage Money for studies abroad.

6) For purchasing inputs essential for completion of the course.

7) Any other expenses required to complete the course like study tours, project work, thesis, etc.

8) for purchase of computer / laptop of uniforms

10) Insurance premium for student borrower

Quantum of Finance:

Need based finance subject to the repayment capacity of parents/guardian subject to

a) Max. upto Rs.10 Lakhs for studies in India.

b) Max. upto Rs.20.00 Lakhs for studies abroad.

Scale if Finance:

Based on the demand received from the college / Institutions, keeping the required margin. The disbursement towards fees etc to college / purchase of equipments should be direct to the College / Institution / supplier

Margin Suggested:

Upto 4 lakhs - Nil

Above Rs. 4.00 lakhs

Studies in India - 5 % and

Studies abroad - 15 %

1. Scholarship / Assistantship to be included in Margin.

2. Margin may be brought in on a year to year basis as and when disbursements are made on a pro-rata basis.

Securities Suggested:

Up to Rs 4.00 lakhs : Parents / Guardian should join the execution of documents.

Security need not be insisted uponAbove 4.00 lakhs and upto Rs 7.50 lakhs ,

Above Rs.4.00 lakhs and Upto Rs.7.50 lakhs:

1. Co-obligation of parents / guardian together with collateral security in the form of suitable third party guarantee. If we are satisfied about the net worth of the parents/means of parents /guardian, we may waive the condition of obtaining third party guarantee

2. However if the party offers security of immovable property and or guarantee from third party on a voluntary basis, it may be accepted for the loans upto Rs.7.50 lakhs

Above Rs.7.50 lakhs

Third party guarantee and immovable security equal to 100% of the loan amount.

Assignment of future income of the student for payment of instalments

The document should be executed by both the student / and the parent / guardian.

The security can be in the form of land / building / Govt. securities / Public Sector Bonds / NSCs / KVPs / LIC Policies, Gold, shares / MF units / debentures, bank deposits in the name of the student/parent/guardian or any other third party. If land/bldg is already mortgaged, the unencumbered portion can be taken as security on second charge basis, provided it covers the loan amount. In case of married person, coobligator can be either spouse or parent/parent-in-law

In case the loan is given for purchase of computers, the same is to be hypothecated to the bank.

Rate of Interest:

Can be Downloaded Below


1. The student/parents have the option to repay the interest during the holiday period.

2. If the student / parent do not opt for the same, the principal o/s together with interest payable should be clubbed and should be repaid in EMIs.

3. The EMI amount should be fixed at the time of commencement of repayment

4. The loan to be repaid in 5 – 7 years after commencement.

5. Holiday Period: Course period + 1 year (or) 6 months after getting job whichever is earlier.

Processing Fees:

No processing fees / upfront charges may be collected for studies in India. For studies abroad, processing fee @ 0.20% should be collected

Capability Certificate:

The bank can also issue the Capability Certificate for students going abroad for higher studies after obtaining the relevant supporting documents from the applicant.

Other Conditions:

In case student/parents approach for educational loan after having completed one/two semesters/years, such loans based on future expenses can be considered, provided the student has cleared all the papers in the previous exams.

If any of the loans of the borrower/co-obligant / guarantor is in default, no loan will be entertained under this scheme till account/s become regular.

1) Life of student should be insured for the loan value

2) Life insurance policy should be assigned in favour of the bank.

3) No Due certificate need not be insisted upon as a precondition for considering educational loan. However, branches may obtain a declaration / an affidavit confirming that no loans are availed from other banks.

4) Loan applications have to be disposed of within a period of 15 days to one month

General :

If the fees have already been paid to the college on account of urgency/payment before the stipulated date by borrowing from the friends/relatives/outsiders/institutions by availing loans, the bank may consider the loan under the scheme for payment of such dues provided sufficient material proof is provided for payment of such fees and also for availment of loans from friends/relatives/outsiders. In such case, the payment should be made direct to the persons from whom borrowed and receipts should be obtained and kept on record.

If the college/institution indicates arrears of fees for the previous year (not yet paid by the student) it may also be considered for finance.

If the student has paid fees for certain semester/s and seeks loan for subsequent semesters, the fees paid for earlier semester may be taken as margin and full (100%) fees may be advanced for subsequent semester/ years, provided original receipts for earlier years are provided to the bank for verification and Xerox copies thereof have to be obtained for our records. 

List of Accredited Universities/Institutions For Interest Subsidy & Rate of Interest Can Be Downloaded From Documents Below


City Union Bank Ltd., "Narayana" No.24 B, Gandhi Nagar, Kumbakonam-612001


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